S&P removes PMI from danger zone

Standard & Poor's supports other analysts who believe private mortgage insurer PMI Mortgage Insurance(PMI) is safe for now, given its ability to maintain solvency through at least the second quarter of next year.
The New York-based ratings agency removed all of PMI's ratings from "credit ratings watch" even though its overall outlook for PMI remains negative on the grounds the firm could struggle to maintain adequate capital over the long haul.
S&P's somewhat improved short-term outlook for PMI is in-line with other analysts who defended the mortgage insurance firms this week, saying liquidity issues will be an ongoing battle even though a bankruptcy or insolvency issue is unlikely in the near future.
PMI's improved outlook through next year resulted from S&P's belief that the insurer could shore up more capital using both internal and external capital initiatives.
"PMI will be able to meet the fourth-quarter 2011 $50 million outstanding (payment) on its credit facility," S&P said. "The next maturity of $250 million does not come due until 2016. Like with PMI, we continue to carefully monitor results across the sector on a quarterly basis. We will take rating actions when there are significant adverse deviations from our forecasts."
Every private mortgage insurer faces extreme liquidity pressure, according to CreditSights analyst Rob Haines, but the possibility of bankruptcy in the immediate future is unlikely for industry players.
Concerns about "near-term insolvency and bankruptcy are overinflated," Haines toldHousingWire this week. "But concerns over the fact these companies are taking on too much risk is not an overblown concern."
Write to Kerri Panchuk.

Related Articles

Kerri Ann Panchuk was the Online Editor of HousingWire.com, and regular contributor to HousingWire magazine. Kerri joined HousingWire as a Reporter in early 2011 and since earned a law degree from Southern Methodist University. She previously worked at the Dallas Business Journal.

This month inHousingWire magazine

Eight years after we began recognizing women for their influential work in the expanding housing and mortgage finance ecosystem, a traditionally male-dominated field, our Women of Influence list is bigger and better than ever! This year, we honor 85 women who are making lasting achievements in each sector of the housing economy. Read on to learn more about these accomplished women and the strides they are making in their industry segments.

Feature

The financial world at large is experimenting with changing its workforce culture in ways not fathomable 10 years ago. For example, in 2011, the dress code for female workers at UBS came to light with unflattering results. In it, the Swiss bank instructed female employees on not just how to dress and how to smell, but also preached the importance for ladies to apply lotion after taking showers. Fast forward to today and fellow Swiss bank, Credit Suisse has now created an official role to boost equal opportunities and create a fair treatment environment. Has the American mortgage industry made similar progress?

Commentary

The conversation around student loan debt and its economic impact on Millennials, those born from 1980 to 1998, has some questioning whether the future of the American Dream is in jeopardy. The nation’s student loan debt has soared to $1.4 trillion, surpassing credit cards in becoming the largest source of personal debt outside a mortgage.